HSBC (5 HKG) Technical Buy & Champion REIT Reduce: Hong Kong Trendspotter Research | April 2025

CGS International April 30, 2025
HSBC Uptrend Resumes, Champion REIT Outperformance Questioned: Hong Kong Retail Stock Analysis

Overnight Market Recap: Cautious Optimism Amid Economic Headwinds

Wall Street traders are cautiously fueling a stock market rebound, betting that Corporate America can navigate slowing economic growth and the disruptions caused by tariffs. Despite weak consumer confidence and labor data, the S&P 500 saw a significant advance, marking its best six-day gain since March 2022 with a 7.5% rise over that period.
Earlier market pressure stemmed from uncertainties surrounding President Donald Trump’s trade war, leading some major companies to withdraw their earnings outlooks. Concerns also linger over Trump’s potential threat to fire Federal Reserve Chairman Powell.
Despite the ongoing tariff turmoil and its increasing economic toll, stock bulls are driving a market comeback. One prevailing theory suggests investors fear missing out (FOMO) on the initial phase of a market bounce, recalling historical US market rebounds. Furthermore, growing bets that the Federal Reserve will cut interest rates to stave off a recession are bolstering a risk-on investment sentiment.
However, the US economy showed signs of slowing at the beginning of 2025 after a period of comfortable growth last year. Weakening consumer activity and a ballooning trade deficit point towards a significant economic impact in the first quarter. Investors continue to prefer short-dated Treasuries as they prepare for a potential further slowdown in US economic activity.

HKG: Champion REIT (CREIT) – Recent Outperformance Unjustified

Champion REIT’s (CREIT) share price has demonstrated notable strength year-to-date (YTD), rising 26%. This performance significantly outpaces the gains seen in Link REIT (up 17% YTD) and the Hang Seng Property Index (up 22% YTD).
Despite this surge, we believe the significant outperformance is unjustified due to several factors:

• Privatisation Unlikely: The chance of privatisation by Great Eagle appears low. CREIT’s valuation, trading at a 56% discount to Net Asset Value (NAV), is relatively expensive compared to its peers, which average a 62% discount.
• Challenging Office Outlook: The outlook for Hong Kong offices remains challenging. We anticipate negative rental reversions for Champion REIT in the fiscal years 2025 (FY25F) and 2026 (FY26F).

Based on these concerns, we reiterate our Reduce rating for CREIT. We have slightly increased the Target Price (TP) to HK$1.53, which implies a 9.02% DPU (Distribution Per Unit) yield for FY25F.

HKG: HSBC Holdings PLC (5) – Technical Buy: Uptrend Back in Action

Following our previous Trendspotter report dated November 5, 2024, HSBC Holdings has surpassed our third target price of HK$85.40 and is approaching our final target of HK$92.00. Consequently, we are reinforcing our technical buy recommendation on HSBC.
Company Description (Bloomberg): HSBC Holdings plc serves as the holding company for the HSBC Group. It offers a comprehensive range of international banking and financial services globally, including retail and corporate banking, trade finance, trusteeship, securities services, custody, capital markets, treasury operations, private banking, investment banking, and insurance.
Analyst: CHUA Wei Ren, CMT

Technical Analysis Highlights:

The technical picture for HSBC suggests a renewed bullish phase:

• Bottoming Formation & Breakout: The stock consolidated near its lows since April 2024. Recent price action formed an ascending triangle pattern, signaling a potential bullish reversal as the price broke out of this formation. The prior bearish gap has also been filled, reinforcing the uptrend’s return.
• Ichimoku Cloud: The Ichimoku indicator displays strong bullish signals.
• MACD: The Moving Average Convergence Divergence (MACD) indicator has risen steadily above the zero line, with a positive histogram confirming bullish momentum.
• Stochastic Oscillator: This indicator recently executed a bullish crossover above the 50-level, suggesting increasing upward momentum.
• Rate of Change (ROC): The 23-period ROC has climbed above the zero line, indicating positive price acceleration.
• Directional Movement Index (DMI): The DMI confirms strong bullish strength in the current trend.
• Volume: Trading volume remains in a healthy expansion phase, supporting the price advance.

Technical Levels:

Source: Tradingview, CGSI RESEARCH
Alternative Exposure: Traders seeking different exposure and potentially reduced foreign exchange (FX) risk could consider HSBC’s Singapore Depository Receipts (SDR) listed on the SGX (SGX: HSHD), trading at S$2.98.